What goes into an appraisal?

We talked with Patrick Grant of the Chuck and Marshall Group, Re/Max Metro Atlanta. He was a registered home appraiser for four years, becoming a Realtor in 2007.

Q. We’ve agreed on a price for the home we want to buy; why do we need an appraisal?

A. The purpose of an appraisal is to protect both the lender and the buyer. Is this the right price for this property? If the buyer has to default, would the lender be able to recoup the amount of money they’ve loaned? Sometimes a seller will have an appraisal done before they put the house on the market. This is most frequently done when a house is for sale by owner. But most times the appraisal will happen after a contract has been signed.

How does the appraiser make a decision on the value of the house?

The appraiser will do an inspection of the house. He will measure the exterior of the house to determine the square footage and look for features like the number of bedrooms and bathrooms, upgrades, garage vs. carport, and overall condition. He will sketch the footprint of the house including all levels from basement to attic. Then he will look for comparable houses within a mile of the subject property. If there are no comparable houses in that geographic range — say, for example, with a $5 million house — then the search goes a little farther out. The important thing is to match the size, features and condition of the property. Just because a house on your street is selling at a certain price doesn’t mean your house will be worth the same.

How many comparables are needed?

Mortgage underwriters require a minimum of three comparable properties. The appraiser adjusts the comparables to make the best match to the subject property and then makes their opinion of the home’s value.

C.W. Cameron For the AJC